Can Blockchain Technology Improve Accountability and Transparency of Cash Waqf in Indonesia?

Diki Zulkarnaen,Murniati Mukhlisin,Sigid Eko Pramono

doi:10.52223/jei3032105

Diki Zulkarnaen, Murniati Mukhlisin + Show 1 more

Open Access

https://doi.org/10.52223/jei3032105

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Abstract

One of the problems that occur in the development of cash waqf in Indonesia is the managerial system and financial reporting. Currently, the safety of waqf data is not guaranteed and is not integrated yet between Islamic Financial Institution – Cash Waqf Recipient/LKS-PWU (Lembaga Keuangan Syari’ah – Penerima Wakaf Uang), Nazir, and BWI (Badan Wakaf Indonesia). The blockchain system comes with changing a centralized approach to being decentralized. The use of the blockchain system in managing waqf funds can be a solution to the problem of waqf that occurs. Therefore, this study aims to examine the implementation of blockchain technology in increasing the accountability and transparency of cash waqf in Indonesia. This study adopts an interview technique with seven practitioners and academics in collecting data and using thematic analysis in the analysis. The research finds that the level of accountability in the waqf management by the LKS-PWU of the Islamic bank is quite acceptable, as evidenced by the fulfillment of five accountability indicators by the LKS-PWU. However, it must be improved in several aspects such as data security, data integration, and real-time reporting. Strategies for increasing accountability include the blockchain implementation in the waqf management both in collecting and distributing waqf by LKS-PWU. The opportunity to apply blockchain to waqf management is very potential because the blockchain system has several advantages such as speed, transparency, and a higher level of security than the conventional system.

Highlights

Waqf is one instrument of Islamic public finance that can guarantee social funding in many aspects
This study evaluates the accountability and transparency of cash waqf in digital services through literature studies, in-depth interviews & observations with waqf practitioners, IT practitioners, LKSPWU, Nazhir, and waqf regulators, and; 2
Interview results with some interviewees from three LKS PWU presented that five accountability components including transparency, liability, control, responsibility, and responsiveness have been owned by three LKS PWU

Summary

Introduction

Waqf is one instrument of Islamic public finance that can guarantee social funding in many aspects. Due to the high potential and the high function of cash waqf, an information technology system that can present accountability and transparency report is needed. That is why the subject of this research is to analyze the Blockchain Technology implementation in increasing the accountability and transparency of cash waqf in Indonesia. 3. How to examine the application of blockchain technology to increase accountability and transparency of cash waqf in Indonesia? This study assesses the use of Blockchain Technology in building an accountable and transparent cash waqf model framework through literature studies, in-depth interviews & observations with waqf practitioners, IT practitioners, LKS-PWU, Nazhir, and waqf regulators. The paper suggests the conclusion and implications of Section Five

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